Dow to Rise with Higher Interest Rates not Lower
QUESTION: I’m just wondering how the stock markets can go up into a rapid bubble in 2015 -17, if the bonds are going to collapse in Oct. of ’15?
do you still stand by your call for stocks to go so high this year? oil is going to go too cheap., and it would seem like that would hurt the stock market.(oversupply) And the dollar appreciation problem.
ANSWER: Yes. It is the rising interest rates that are a reflection of demand to borrow that is the hallmark of bull markets. The rise in the dollar is what attracts foreign capital and that is what makes a bubble. You do not get a bubble on simple domestic trends. A bubble like 1929 in the USA and 1989 in Japan or even the DOT.COM in 2000, were are driven by capital inflows into those nations.
Just look at the charts yourself. Every time interest rates decline there is a bear market. When rates rise, there is a bull market. The stock market has NEVER peaked with the same rate twice because it is the difference between interest rates and expectations. If you expect the market to double you will pay 25%. You do not see the stock market peak with the bottom in rates. That has NEVER happened even once.
I understand that this is not the norm. This is NOT my personal opinion or soap-box. This is simply how things function. We identify the REAL way capital moves and that is what our computer monitors. This is not a popularity contest, politically-correct forecast, and the majority of people will not read this site for they are not capable of opening their mind to try to explore how the world really ticks. So don’t worry, the majority must always be wrong for that is the fuel that makes the markets swing wildly.